China On Edge

Council on Foreign Relations

China â€œmay haveâ€ overinvested to the tune of 12-20% of gross domestic product (GDP) between 2007 and 2011 â€“ this is the diplomatically worded conclusion of a working paper released last week by the IMF. This weekâ€™s Geo-Graphic backs it up.

Constructionâ€™s share of the Chinese labor force, at 9%, is also 2 percentage points higher than in the United States at the peak of the housing bubble in September 2006. Labor data therefore suggest that China is headed for an extended slowdown in GDP growth.